Hiring of Employee

Ollendorf vs. Abrahanson

38 Phil 585

Facts:

The record discloses that plaintiff is and for a long time past has been engaged in the city of
Manila and elsewhere in the Philippine Islands in the business of manufacturing ladies embroidered
underwear for export. Plaintiff imports the material from which this underwear is made and adopts
decorative designs which are embroidered upon it by Filipino needle workers from patterns selected
and supplied by him. Most of the embroidery work is done in the homes of the workers. The
embroidered material is then returned to plaintiff's factory in Manila where it is made into finished
garments and prepared for export. The embroiderers employed by plaintiff are under contract to work
for plaintiff exclusively. Some fifteen thousand home workers and eight hundred factory workers are
engaged in this work for plaintiff, and some two and a half million pesos are invested in his business.

On September 10, 1915, plaintiff and defendant entered into a contract. Under the terms of this
agreement defendant entered the employ of plaintiff and worked for him until April, 1916, when
defendant, on account of ill health, left plaintiff's employ and went to the United States. While in
plaintiff's establishment, and had full opportunity to acquaint himself with plaintiff's business method
and business connection. The duties performed by him were such as to make it necessary that he
should have this knowledge of plaintiff's business. Defendant had a general knowledge of the
Philippine embroidery business before his employment by plaintiff, having been engaged in similar
work for several years.

Under the terms of this agreement defendant entered the employ of plaintiff and worked for him
until April, 1916, when defendant, on account of ill health, left plaintiff's employ and went to the
United States. While in plaintiff's establishment, and had full opportunity to acquaint himself with
plaintiff's business method and business connection. The duties performed by him were such as to
make it necessary that he should have this knowledge of plaintiff's business. Defendant had a general
knowledge of the Philippine embroidery business before his employment by plaintiff, having been
engaged in similar work for several years.

Some months after his departure for the United States, defendant returned to Manila as the
manager of the Philippine Underwear Company, a corporation. This corporation does not maintain a
factory in the Philippine Islands, but send material and embroidery designs from New York to its
local representative here who employs Filipino needle workers to embroider the designs and make up
the garments in their homes. The only difference between plaintiff's business and that of the firm by
which the defendant is employed, is the method of doing the finishing work -- the manufacture of the
embroidered material into finished garments. Defendant admits that both firms turn out the same class
of goods and that they are exported to the same market. It also clearly appears from the evidence that
defendant has employed to work his form some of the same workers employed by the plaintiff.

Plaintiff commenced this action, the principal purpose of which is to prevent by injunction, any
further breach of that part of defendant's contract of employment by plaintiff, by which he agreed that
he would not "enter into or engage himself directly or indirectly . . . in a similar or competitive
business to that of (plaintiff) anywhere within the Philippine Islands for a period of five years . . ."
from the date of the agreement. The lower court granted a preliminary injunction, and upon trial the
injunction was made perpetual.
 Defendant argues that even assuming that there has been a breach of the agreement, the judgment
of the court below is nevertheless erroneous, contending that (1) the contract is void for lack of
mutuality; (2) that the contract is void as constituting an unreasonable restraint of trade; (3) that
plaintiff has failed to show that he has suffered any estimable pecuniary damage; and (4) that even
assuming that such damage as to warrant the court in restraining by injunction its continuance.

Issue:

Whether or not the stipulation constitutes a restraint of trade?

Held:

We are of the opinion that the contract was not void as constituting an unreasonable restraint of
trade.

We adopt the modern rule that the validity of restraints upon trade or employment is to be
determined by the intrinsic reasonableness of restriction in each case, rather than by any fixed rule,
and that such restrictions may be upheld when not contrary to afford a fair and reasonable protection
to the party in whose favor it is imposed.

Examining the contract here in question from this stand point, it does not seem so with respect to
an employee whose duties are such as of necessity to give him an insight into the general scope and
details of his employers business. A business enterprise may and often does depend for its success
upon the owner's relations with other dealers, his skill in establishing favorable connections, his
methods of buying and selling -- a multitude of details, none vital if considered alone, but which in
the aggregate constitute the sum total of the advantages which the result of the experience or
individual aptitude and ability of the man or men by whom the business has been built up. Failure or
success may depend upon the possession of these intangible but all important assets, and it is natural
that their possessor should seek to keep them from falling into the hands of his competitors. It is with
this object in view that such restrictions as that now under consideration are written into contracts of
employment. Their purpose is the protection of the employer, and if they do not go beyond what is
reasonably necessary to effectuate this purpose they should be upheld.

Having held that the contract is valid, we pass to a consideration of defendant's objections to its
enforcement by injunction.

It is contended that plaintiff has not proved that he has suffered any estimable pecuniary damage
by reason of defendant's breach of the contract, and that for that reason his action must fail. It is
further contended that in no event is it proper to enforce such a contract as this by injunction, because
it has not been alleged and proved that the continuance of the acts complained of will cause plaintiff
"irreparable damage." These objections can conveniently be considered together.
Del Castillo vs. Richmond
45 Phil 679

Facts:

The said contract was acknowledge before a notary on the same day of its execution.

The plaintiff alleges that the provisions and conditions contained in the third paragraph of said
contract constitute an illegal and unreasonable restriction upon his liberty to contract, are contrary to
public policy, and are unnecessary in order to constitute a just and reasonable protection to the
defendant; and asked that the same be declared null and void and of no effect. The defendant
interposed a general and special defense. In his special defense he alleges "that during the time the
plaintiff was in the defendant's employ he obtained knowledge of his trade and professional secrets
and came to know and became acquainted and established friendly relations with his customers so
that to now annul the contract and permit plaintiff to establish a competing drugstore in the town of
Legaspi, as plaintiff has announced his intention to do, would be extremely prejudicial to defendant's
interest." The defendant further, in an amended answer, alleges "that this action not having been
brought within four years from the time the contract referred to in the complaint was executed, the
same has prescribed."

Issue:

Whether or not the stated provision of the contract is void?

Held:

In that case we held that a contract by which an employee agrees to refrain for a given lenght of
time, after the expiration of the term of his employment, from engaging in a business, competitive
with that of his employer, is not void as being in restraint of trade if the restraint imposed is not
greater than that which is necessary to afford a reasonable protection. In all cases like the present, the
question is whether, under the particular circumstances of the case and the nature of the particular
contract involved in it, the contract is, or is not, unreasonable. Of course in establishing whether the
contract is a reasonable or unreasonable one, the nature of the business must also be considered. What
would be a reasonable restriction as to time and place upon the manufacture of railway locomotive
engines might be a very unreasonable restriction when imposed upon the employment of a day
laborer.

Considering the nature of the business in which the defendant is engaged, in relation with the
limitation placed upon the plaintiff both as to time and place, we are of the opinion, and so decide,
that such limitation is legal and reasonable and not contrary to public policy. Therefore the judgment
appealed from should be and is hereby affirmed, with costs. So ordered.
PT&T NLRC
277 SCRA 596, 1997

Facts:

This is a case for illegal dismissal filed by Grace de Guzman against PT&T.

Grace de Guzman is a probationary employee of PT&T. In her job application, she represented that

she was single although she was married. When management found out, she was made to explain.
However, her explanation was found unsatisfactory so she was subsequently dismissed from work.

Grace thus filed a case for illegal dismissal against PT&T with RAB. According to the Labor Arbiter,
Grace, who had already gained the status of regular employee, was illegally dismissed by PT&T.
Moreover, he ruled that Grace was apparently discriminated against on account of her having
contracted marriage in violation of company rules.

On appeal to the NLRC, the decision of the Labor Arbiter was upheld. The Motion for
Reconsideration was likewise rebuffed, hence, this special civil action.

Petitioner argued that the dismissal was not because Grace was married but because of her
concealment of the fact that she was married. Such concealment amounted to dishonesty, which was
why she was dismissed from work.

Issue: 

Whether or not the company policy of not accepting married women for employment was

discriminatory

Held:

There was illegal dismissal

As an employee who had therefore gained regular status, and as she had been dismissed without just
cause, she is entitled to reinstatement without loss of seniority rights and other privileges and to full
back wages, inclusive of allowances and other benefits or their monetary equivalent.

On Stipulation against Marriage

In the final reckoning, the danger of PT&T’s policy against marriage is that it strikes at the
very essence, ideals and purpose of marriage as an inviolable social institution and, ultimately, of the
family as the foundation of the nation.
Duncan Association of Detailman-PTGWO and Pedro A. Tecson vs. Glaxo Welcome
Philippines International
GR. 162994, September 17, 2004

Facts:

Tecson was hired by Glaxo as a medical representative on Oct. 24, 1995. Contract
of employment signed by Tecson stipulates, among others, that he agrees to study and abide by the
existing company rules; to disclose to management any existing future relationship by consanguinity
or affinity with co-employees or employees with competing drug companies and should management
find that such relationship poses a prossible conflict of interest, to resign from the company.
Company's Code of Employee Conduct provides the same with stipulation that management may
transfer the employee to another department in a non-counterchecking position or preparation
for employment outside of the company after 6 months. 

Tecson was initially assigned to market Glaxo's products in the Camarines Sur-Camarines Norte area
and entered into aromantic relationship with Betsy, an employee of Astra, Glaxo's competition.
Before getting married, Tecson's District Manager reminded him several times of the conflict of
interest but marriage took place in Sept. 1998. In Jan. 1999, Tecson's superiors informed him of
conflict of intrest. Tecson asked for time to comply with the condition (that either he or Betsy resign
from their respective positions). Unable to comply with condition, Glaxo transferred Tecson to the
Butuan-Surigao City-Agusan del Sur sales area. After his request against transfer was denied, Tecson
brought the matter to Glaxo's Grievance Committee and while pending, he continued to act
as medical representative in the Camarines Sur-Camarines Norte sales area. On Nov. 15, 2000, the
National Conciliation and Mediation Board ruled that Glaxo's policy was valid...

Issue:

Whether or not the policy of a pharmaceutical company prohibiting its employees from marrying
employees of any competitor company is valid

Held:

The challenged policy has been implemented by Glaxo impartially and disinterestedly for a long
period of time. In the case at bar, the record shows that Glaxo gave Tecson several chances to
eliminate the conflict of interest brought about by his relationship with Betsy, but he never availed of
any of them.
City of Manila vs. Laguio
G.R. No. 118127; April 12, 2005

Facts

Private respondent is a corporation engaged in the business of operating hotels, motels, hostels and
lodging houses. It built and opened Victoria Court in Malate which was licensed as a motel although
duly accredited with the Department of Tourism as a hotel.

Enacted by the City Council on 9 March 1993 and approved by petitioner City Mayor on 30 March
1993, was an ordinance PROHIBITING THE ESTABLISHMENT OR OPERATION OF
BUSINESSES PROVIDING CERTAIN FORMS OF AMUSEMENT, ENTERTAINMENT,
SERVICES AND FACILITIES IN THE ERMITA-MALATE AREA. The prohibition was intended
to curb businesses providing certain forms of amusement, entertainment, services and facilities where
women are used as tools in entertainment and which tend to disturb the community, annoy the
inhabitants, and adversely affect the social and moral welfare of the community. Respondent’s motel
was included among the enumeration therein.

Issue :

Whether or not the assailed ordinance is constitutionally infirm.

Held:

Affirmed

The tests of a valid ordinance are well established. A long line of decisions has held that for an
ordinance to be valid, it must not only be within the corporate powers of the local government unit to
enact and must be passed according to the procedure prescribed by law, it   must also conform to the
following substantive requirements: (1) must not contravene the Constitution or any statute; (2) must
not be unfair or oppressive; (3) must not be partial or discriminatory; (4) must not prohibit but may
regulate trade; (5) must be general and consistent with public policy; and (6) must not be
unreasonable.

The Ordinance invades fundamental personal and property rights and impairs personal privileges.
It is constitutionally infirm. The Ordinance contravenes statutes; it is discriminatory and unreasonable
in its operation; it is not sufficiently detailed and explicit that abuses may attend the enforcement of
its sanctions. And not to be forgotten, the City Council under the Code had no power to enact the
Ordinance and is therefore ultra vires, null and void.

Concededly, the challenged Ordinance was enacted with the best of motives and shares the
concern of the public for the cleansing of the Ermita-Malate area of its social sins. Police power
legislation of such character deserves the full endorsement of the judiciary ¾we reiterate our support
for it. But inspite of its virtuous aims, the enactment of the Ordinance has no statutory or
constitutional authority to stand on. Local legislative bodies, in this case, the City Council, cannot
prohibit the operation of the enumerated establishments under Section 1 thereof or order their transfer
or conversion without infringing the constitutional guarantees of due process and equal protection of
laws - not even under the guise of police power.
 The object of the Ordinance was, accordingly, the promotion and protection of the social and
moral values of the community. Granting for the sake of argument that the objectives of the
Ordinance are within the scope of the City Council’s police powers, the means employed for the
accomplishment thereof were unreasonable and unduly oppressive.

It is undoubtedly one of the fundamental duties of the City of Manila to make all reasonable
regulations looking to the promotion of the moral and social values of the community. However, the
worthy aim of fostering public morals and the eradication of the community’s social ills can be
achieved through means less restrictive of private rights; it can be attained by reasonable restrictions
rather than by an absolute prohibition. The closing down and transfer of businesses or their
conversion into businesses “allowed” under the Ordinance have no reasonable relation to the
accomplishment of its purposes. Otherwise stated, the prohibition of the enumerated establishments
will not per se protect and promote the social and moral welfare of the community; it will not in itself
eradicate the alluded social ills of prostitution, adultery, fornication nor will it arrest the spread of
sexual disease in Manila.

Conceding for the nonce that the Ermita-Malate area teems with houses of ill-repute and
establishments of the like which the City Council may lawfully prohibit, it is baseless and
insupportable to bring within that classification sauna parlors, massage parlors, karaoke bars, night
clubs, day clubs, super clubs, discotheques, cabarets, dance halls, motels and inns. This is not
warranted under the accepted definitions of these terms. The enumerated establishments are lawful
pursuits which are not per se offensive to the moral welfare of the community.

That these are used as arenas to consummate illicit sexual affairs and as venues to further the
illegal prostitution is of no moment. We lay stress on the acrid truth that sexual immorality, being a
human frailty, may take place in the most innocent of places that it may even take place in the
substitute establishments enumerated under Section 3 of the Ordinance.  If the flawed logic of the
Ordinance were to be followed, in the remote instance that an immoral sexual act transpires in a
church cloister or a court chamber, we would behold the spectacle of the City of Manila ordering the
closure of the church or court concerned.  Every house, building, park, curb, street or even vehicles
for that matter will not be exempt from the prohibition. Simply because there are no “pure” places
where there are impure men.

The problem, it needs to be pointed out, is not the establishment, which by its nature cannot be
said to be injurious to the health or comfort of the community and which in itself is amoral, but the
deplorable human activity that may occur within its premises. While a motel may be used as a venue
for immoral sexual activity, it cannot for that reason alone be punished. It cannot be classified as a
house of ill-repute or as a nuisance per se on a mere likelihood or a naked assumption. If that were so
and if that were allowed, then the Ermita-Malate area would not only be purged of its supposed social
ills, it would be extinguished of its soul as well as every human activity, reprehensible or not, in its
every nook and cranny would be laid bare to the estimation of the authorities.

The Ordinance seeks to legislate morality but fails to address the core issues of morality. Try as
the Ordinance may to shape morality, it should not foster the illusion that it can make a moral man
out of it because immorality is not a thing, a building or establishment; it is in the hearts of men. The
City Council instead should regulate human conduct that occurs inside the establishments, but not to
the detriment of liberty and privacy which are covenants, premiums and blessings of democracy.
Star Paper Corporation vs. Simbol
GR No 164774, April 12, 2006

Facts:

Petitioner Star Paper Corporation (the company) is a corporation engaged in trading – principally
of paper products. Josephine Ongsitco is its Manager of the Personnel and Administration
Department while Sebastian Chua is its Managing Director.

The evidence for the petitioners show that respondents Ronaldo D. Simbol (Simbol), Wilfreda N.
Comia (Comia) and Lorna E. Estrella (Estrella) were all regular employees of the company. 1

Simbol was employed by the company on October 27, 1993. He met Alma Dayrit, also an
employee of the company, whom he married on June 27, 1998. Prior to the marriage, Ongsitco
advised the couple that should they decide to get married, one of them should resign pursuant to a
company policy promulgated in 1995,2 viz.:

1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd
degree of relationship, already employed by the company.

2. In case of two of our employees (both singles [sic], one male and another female) developed a
friendly relationship during the course of their employment and then decided to get married, one
of them should resign to preserve the policy stated above. 3

Simbol resigned on June 20, 1998 pursuant to the company policy.4

Comia was hired by the company on February 5, 1997. She met Howard Comia, a co-employee,
whom she married on June 1, 2000. Ongsitco likewise reminded them that pursuant to company
policy, one must resign should they decide to get married. Comia resigned on June 30, 2000. 5

Estrella was hired on July 29, 1994. She met Luisito Zuñiga (Zuñiga), also a co-worker.
Petitioners stated that Zuñiga, a married man, got Estrella pregnant. The company allegedly could
have terminated her services due to immorality but she opted to resign on December 21, 1999. 6

The respondents each signed a Release and Confirmation Agreement. They stated therein that
they have no money and property accountabilities in the company and that they release the latter of
any claim or demand of whatever nature.7

Respondents offer a different version of their dismissal. Simbol and Comia allege that they did
not resign voluntarily; they were compelled to resign in view of an illegal company policy. As to
respondent Estrella, she alleges that she had a relationship with co-worker Zuñiga who
misrepresented himself as a married but separated man. After he got her pregnant, she discovered that
he was not separated. Thus, she severed her relationship with him to avoid dismissal due to the
company policy. On November 30, 1999, she met an accident and was advised by the doctor at the
Orthopedic Hospital to recuperate for twenty-one (21) days. She returned to work on December 21,
1999 but she found out that her name was on-hold at the gate. She was denied entry.

Respondents later filed a complaint for unfair labor practice, constructive dismissal, separation
pay and attorney’s fees. They averred that the aforementioned company policy is illegal and
contravenes Article 136 of the Labor Code. They also contended that they were dismissed due to their
union membership.
Issue:

Whether or not the act of the company constituted as an unfair labor practice

Held:

The Labor Code is the most comprehensive piece of legislation protecting labor. The case at bar
involves Article 136 of the Labor Code which provides:

Art. 136. It shall be unlawful for an employer to require as a condition of employment or

continuation of employment that a woman employee shall not get married, or to stipulate expressly or
tacitly that upon getting married a woman employee shall be deemed resigned or separated, or to
actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason
of her marriage.

Respondents submit that their dismissal violates the above provision. Petitioners allege that its
policy "may appear to be contrary to Article 136 of the Labor Code" but it assumes a new meaning if
read together with the first paragraph of the rule. The rule does not require the woman employee to
resign.

The employee spouses have the right to choose who between them should resign. Further, they
are free to marry persons other than co-employees. Hence, it is not the marital status of the
employee, per se, that is being discriminated. It is only intended to carry out its no-employment-for-
relatives-within-the-third-degree-policy which is within the ambit of the prerogatives of
management.16

Petitioners’ sole contention that "the company did not just want to have two (2) or more of its
employees related between the third degree by affinity and/or consanguinity" 38 is lame. That the
second paragraph was meant to give teeth to the first paragraph of the questioned rule 39 is evidently
not the valid reasonable business necessity required by the law.

It is significant to note that in the case at bar, respondents were hired after they were found fit for
the job, but were asked to resign when they married a co-employee. Petitioners failed to show how
the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an employee of the
Repacking Section, could be detrimental to its business operations. Neither did petitioners explain
how this detriment will happen in the case of Wilfreda Comia, then a Production Helper in the
Selecting Department, who married Howard Comia, then a helper in the cutter-machine. The policy is
premised on the mere fear that employees married to each other will be less efficient. If we uphold
the questioned rule without valid justification, the employer can create policies based on an unproven
presumption of a perceived danger at the expense of an employee’s right to security of tenure.
Del Monte Phils vs. Velasco
GR No 153477, March 6, 2007

Facts:

Lolita M. Velasco (respondent) started working with Del Monte Philippines (petitioner) on
October 21, 1976 as a seasonal employee and was regularized on May 1, 1977. Her latest assignment
was as Field Laborer. On June 16, 1987, respondent was warned in writing due to her absences. On
May 4, 1991, respondent, thru a letter, was again warned in writing by petitioner about her absences
without permission and a forfeiture of her vacation leave entitlement for the year 1990-1991 was
imposed against her. On September 14, 1992, another warning letter was sent to respondent regarding
her absences without permission during the year 1991-1992. Her vacation entitlement for the said
employment year affected was consequently forfeited. In view of the said alleged absences without
permission, on September 17, 1994, a notice of hearing was sent to respondent notifying her of the
charges filed against her for violating the Absence Without Official Leave rule: that is for excessive
absence without permission on August 15-18, 29-31 and September 1-10, 1994. The hearing was set
on September 23, 1994. Respondent having failed to appear on September 23, 1994 hearing, another
notice of hearing was sent to her resetting the investigation on September 30, 1994. It was again reset
to October 5, 1994. On January 10, 1995, after hearing, the petitioner terminated the services of
respondent effective January 16, 1994 due to excessive absences without permission.

Issue:

Whether or not respondent was illegally dismissed

Held:

In this case, by the measure of substantial evidence, what is controlling is the finding of the
NLRC and the CA that respondent was pregnant and suffered from related ailments. It would be
unreasonable to isolate such condition strictly to the dates stated in the Medical Certificate or the
Discharge Summary. It can be safely assumed that the absences that are not covered by, but which
nonetheless approximate, the dates stated in the Discharge Summary and Medical Certificate, are due
to the continuing condition of pregnancy and related illnesses, and, hence, are justified absences.

In this jurisdiction tardiness and absenteeism, like abandonment, are recognized forms of neglect
of duties, the existence of which justify the dismissal of the erring employee. Respondent’s rule
penalizing with discharge any employee who has incurred six (6) or more absences without
permission or subsequent justification is admittedly within the purview of the foregoing standard.

The Court agrees with the CA in concluding that respondent’s sickness was pregnancy-related
and, therefore, the petitioner cannot terminate respondent’s services because in doing so, petitioner
will, in effect, be violating the Labor Code which prohibits an employer to discharge an employee on
account of the latter’s pregnancy.11
Yrasuegui vs. Philippine Airlines
GR 168081, Octorber 17, 2008

Facts:

Petitioner was a former international flight steward of PAL. He had problems meeting the
required weight standards for cabin and crew. He was advised to go on leave without pay several
times to address his weight concerns, to no avail. PAL had him grounded until such time he
satisfactorily complies with the weight standards and he was directed to report every two weeks for
weight checks.

On November 5, 1992, petitioner weighed 205 lbs, way beyond his ideal weight of 166 lbs. On
June 15, 1993, petitioner was formally informed by PAL that due to his inability to attain his ideal
weight, and considering the utmost leniency extended to him which spanned a period covering a total
of almost five (5) years, his services were considered terminated effective immediately

Issue:

Whether or not the petitioner was illegally dismissed.

Held:

The obesity of petitioner is a ground for dismissal under Article 282(e) [44] of the Labor Code.
[T]he standards violated in this case were not mere orders of the employer; they were the prescribed
weights that a cabin crew must maintain in order to qualify for and keep his or her position in the
company. In other words, they were standards that establish continuing qualifications for an
employees position.

By its nature, these qualifying standards are norms that apply prior to and after an employee is
hired. They apply prior to employment because these are the standards a job applicant must initially
meet in order to be hired. They apply after hiring because an employee must continue to meet these
standards while on the job in order to keep his job. Under this perspective, a violation is not one of
the faults for which an employee can be dismissed

The dismissal of petitioner can be predicated on the bona fide occupational qualification defense.
Aircrafts have constricted cabin space, and narrow aisles and exit doors. Being overwieight impedes
mobility in times of emergencies where seconds are precious.

Petitioner was not, therefore, illegally dismissed. He is entitled to a separation pay, including his
regular allowances.